Debt Management Advice

Lord Sharkey Excerpts

Monday 7th September 2015 Lords Chamber

Asked by

[Lord Sharkey]

To ask Her Majesty’s Government what assessment they have made of the thematic review Quality of Debt Management Advice published by the Financial Conduct Authority in June 2015.

[Lord Ashton of Hyde (Con)]

My Lords, the Government are very concerned about the problems in the debt management market, including the quality of advice, which was highlighted by the Financial Conduct Authority’s thematic review. This is why we reformed debt management regulation, transforming responsibility to the FCA’s more robust regime to better protect consumers. Debt management firms are currently going through the FCA authorisation process. Firms that do not meet the FCA’s threshold conditions will not be able to continue in the market.

[Lord Sharkey (LD)]

My Lords, the Government are right to be concerned. The fact is that the FCA found that a staggering 60% of fee-charging debt advice cases posed a high risk of harm. The requirement to disclose the availability of free debt advice at first contact was often not done or was rushed, not impartial or not sufficiently prominent. It is not even clear whether cold-calling lead generators are obliged to disclose the availability of free debt advice at all. Cold-calling lead generation is banned for mortgages. Will the Minister agree to meet me to discuss banning it for debt advice as well?

[Lord Ashton of Hyde]

My Lords, although lead generators are independent and not regulated, the FCA requires debt management firms accepting leads from lead generators to satisfy themselves that the business has been procured fairly and in accordance with data protection privacy in electronic communication laws. The FCA is going through the authorisation process at the moment, as I said, and that is one of the things that will be taken into account. It has to ensure that the lead generators do things such as signpost to consumers the availability of free debt advice. The FCA has committed to undertake a review of its rules on unsolicited marketing calls, emails and text messages from consumer credit firms. Lastly, of course I am always pleased to meet the noble Lord.